RAHUL RANA
KF Rookie
It is beneficial to invest in SGB bonds rather in physical gold or GOLD ETF?
It is good idea to invest in SGB(Sovereign Gold bonds)?
- Thread starter RAHUL RANA
- Start date
KifaaytiBabu
KF Ace
| Parameter | SGB | Physical Gold | Gold ETF |
| Storage risk | low | High | Low |
| Liquidity | Medium | High | High |
| Interest | 2.5% | NIL | NIL |
| TAX saving | Yes | No | NO |
| Holding Period | YES ( 8 yrs ) , can sell before that but no tax saving then | NA | NA |
| Storage | Demat | Self | demat |
17ysaurabh
KF Mentor
Yes, it is. Multiple benefits:
- 2.5% interest paid twice in a year
- Lock-in of 5 years but if kept for 8 years, it's tax free.
- Risk-free
There are many advantages of investing in SGB (over Physical Gold) like extra interest, Tax benefits, etc. But there are some disadvantages as well - high lockin, liquidity risk, etc. We had covered this in detail in a YT Video. You can watch it here
***********.youtube.com/watch?v=JbHbz4knzdY&t=15s
Chiragsh06
KF Rookie
Yes it is always advisable to invest in Gold as part of your portfolio diversification and also to minimalize the risk or to balance out your equity risk i.e. Stocks and MFs.
SGB is the best way to invest in Gold. Alternatively you can also try GOLDBEES as an option to invest in GOLD. As a personal choice I keep 5-10% allocation in precious metals for diversification.
SGB is the best way to invest in Gold. Alternatively you can also try GOLDBEES as an option to invest in GOLD. As a personal choice I keep 5-10% allocation in precious metals for diversification.
Chiragsh06
KF Rookie
Yes, SGB is preferred over physical gold. Below could be the possible ranking in gold instruments.
1.) SGB: Comes with longer security as Gov. backed scheme. Interest advantage. Longer waiting period of 8 years, but can be sold on exchange anytime.
2.) Gold ETF: Fractional investment in gold, buy/sell any time during trading market hours.
3.) Physical Gold: Looks & feels good in hand. Attracts making charges and security charges in bank locker.
4.) Virtual Gold through Apps (i.e. Paytm, gpay, etc): Off not much use, as the difference in buy and sell price is significant.
But do GoldBees really offer returns, it's price is around 50 for such a long time
Chiragsh06
KF Rookie
For me such a long time is a relative concept. You cannot expect a stock like return in GoldBees or in any ETF for that matter. Gold will provide you a cushion when your equity investments are down as per its negative correlation with stock market.
E.g. GoldBees was at around 35 in March 20 and it is now 50 which is a significant jump of approx 40% in last 3 years or so.
Investments in Gold is considered far safer, so slow returns.
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